The road for startup companies has always been fraught with unpredictable bumps, but Lordstown Motors Corp. just had a week in it which it careened from one pothole to another.
The Ohio company aiming to build electric work trucks in an old General Motors plant this summer is reeling in the aftermath of executive churn, retracted statements, financial ambiguity and other issues, such as shareholder lawsuits.
Industry analysts, many of whom have long been skeptical of the company’s prospects of profitably selling the Endurance, a Chevrolet Silverado-sized battery-powered four-motor pickup, are now even more doubtful. That’s despite Executive Chairman Angela Strand’s declaration that “it’s a new day” for Lordstown.
“If they actually do have $400 million to $500 million in cash on hand, it seems like they should be able to build an initial batch of trucks and actually deliver them to customers,” said Sam Abuelsamid, principal analyst for e-mobility research at Guidehouse Insights. “But the real question is: Are there any customers that want this truck? Especially now that the world has seen the F-150 Lightning, and everybody knows the [electric] Chevrolet Silverado is coming. I can’t see anybody putting down money for this truck. The F-150 starts at 41 grand delivered and has 230 miles of range — and that’s with 1,000 pounds of payload,” he added.
Here is a brief recap of the events of Lordstown’s turbulent week.
Monday, June 14: Company founder and CEO Steve Burns and CFO Julio Rodriguez quit suddenly. The pair had been under pressure since early March, when a short seller, Hindenburg Research, issued a report that said Lordstown’s claimed 100,000 truck order bank was bogus.
Tuesday, June 15: During a media event, Lords-town President Rich Schmidt reiterated claims the company had “firm” and “binding” orders for two years of production of the Endurance. He also slipped in a $2,500 price increase, bringing the base model up to $55,000.
At the same event, Schmidt told reporters Lords-town had enough cash to last until next May and to begin “limited production” of the Endurance. But Schmidt’s claims don’t jibe with Lordstown’s financial disclosures.
In March, the company said it had $587 million in cash and expected to end the year with between $50 million and $75 million in the bank. Then on June 8, the company said in a financial filing that it could go out of business in a year unless it raised more money.
Lordstown officials did not respond to requests by Automotive News last week for clarity on the company’s finances.
Thursday, June 17: The company admitted it had zero “firm” and “binding” orders for the Endurance. Then, in the face of skepticism on Wall Street and elsewhere, Lordstown hired a former GM executive, John Whitcomb, to the newly created position of vice president of global commercial operations.
Whitcomb joins Strand, who is overseeing Lords-town until a permanent CEO is named, and interim CFO Becky Roof on the management team. Strand was the company’s lead independent board member, while Roof, a managing director at consulting firm AlixPartners, did stints as interim CFO at Hudson’s Bay Co., which owns retailer Saks Fifth Avenue, and at Eastman Kodak. Whitcomb’s GM duties included directing the company’s global retail and sales technology.
With each new disclosure last week, Lordstown’s stock price bounced like a pinball. It reached a high of over $31 per share last fall and closed at $10.65 per share Friday, June 18.
Jeff Schuster, president of the Americas and global forecasting for LMC Automotive, believes that although Lordstown’s truck is in a very hot segment, its chances of success will diminish with each launch of a rival electric pickup.
“The struggle is because we know about the F-150 Lightning. Rivian is ready to shoot out into the market. You’ll have Tesla there at some point. GM is there,” he said.
“If you can’t get your vehicle that is a new brand ahead of some of this or at the same time, it’s going to be tough to make it and have customers give them a shot.”